I get questioned a lot about what is going on with our economy and why the rand keeps slipping against other major currencies and why is our economy doing so bad?
Although there are various factors to take into consideration, I will try and summarize some key points and try keeping it simple.
The Rand issue and why it is weakening so much:
Apart from our own political uncertainty, we also have the problem that the rand is the most liquid emerging market currency (due to our excellent financial and banking industry). Thus if any of the big emerging markets or countries go through a bad patch like Turkey (Lira has lost 42% of its value) the rand is quickly sold off and we also have an 11% slide against the dollar.
Our economy and why is it having such a hard time:
The China-US trade wars are affecting all emerging markets and unfortunately South Africa has not escaped this issue. With the two powerhouses going at each other, it seems like emerging markets have become unfavorable and the first world countries are keeping their money locally and not investing in countries like South Africa.
Another factor is also our local political climate which is scaring off a lot of foreign investment especially the land expropriation debate.
So what can you do to counter the economic pressures?
- Budget, budget, budget. This is the key to financial wellness. You need to know where your money is spent.
- Cut back on sweets, takeaways and unnecessary spending (takeaway coffee etc)
- Start using your rewards programs and discounts (Vitality, Clicks ClubCard etc) – read more here
- Check your bank statements for small forgotten debits and cut back on them (memberships, add-ons to contracts etc)
- Let us assist in evaluating your short-term insurance and establishing if your current premium is still market related.
Please contact me if you would like to schedule a meeting to discuss your current financial plan.